<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                                   FORM 10-QSB

(Mark One)

  X      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
-----    ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED        SEPTEMBER 30, 1997
                                  --------------------------

         TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
----      ACT

FOR THE TRANSITION PERIOD FROM                        TO 
                               ------------------        -----------------

COMMISSION FILE NUMBER    0-4169  
                       ----------

                                       SYS
--------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

              CALIFORNIA                               95-2467354
     -------------------------------            -----------------------
      (State or Other Jurisdiction of              (I.R.S. Employer
      Incorporation or Organization)              Identification No.)

          6363 GREENWICH DRIVE, SUITE 200, SAN DIEGO, CALIFORNIA  92122
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (619) 587-0484
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


--------------------------------------------------------------------------------
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

     Check whether the issuer: (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months 
(or for such shorter period that the registrant was required to file such 
reports), and (2) has been subject to such filing requirements for the past 
90 days.

Yes   X      No        
    -----       ------

     State the number of shares outstanding of each of the issuer's classes 
of common equity, as of the latest practicable date: 3,138,786 SHARES OF 
COMMON STOCK, WITHOUT PAR VALUE, AS OF SEPTEMBER 30, 1997.

     Transitional Small Business Disclosure Format (check one):

Yes    X       No         
    ------       -------


                                      1
<PAGE>


                                TABLE OF CONTENTS


                                                                           PAGE
PART I - FINANCIAL INFORMATION                                            NUMBER


     Item 1.   Financial Statements
               Condensed Balance Sheets (unaudited)
                    September 30, 1997 and June 30, 1997. . . . . . . . . . . 3
               Condensed Statements of Operations (unaudited)
                    Three Months Ended September 30, 1997
                    and Three Months Ended September 30, 1996 . . . . . . . . 4
               Condensed Statements of Cash Flows (unaudited)
                    Three Months Ended September 30, 1997
                    and Three Months Ended September 30, 1996 . . . . . . . . 5
               Notes to Condensed Financial Statements (unaudited). . . . . . 6

     Item 1a.  Factors Which May Affect Future Results. . . . . . . . . . . . 6

     Item 2.   Management's Discussion and Analysis of Financial Condition
                 and Results of Operations

                    Description of Business . . . . . . . . . . . . . . . . . 9
                    Results of Operations . . . . . . . . . . . . . . . . . .10
                    Liquidity and Capital Resources . . . . . . . . . . . . .10


PART II - OTHER INFORMATION

     Item 1.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 12

     Item 2.   Changes in Securities . . . . . . . . . . . . . . . . . . . . 12

     Item 3.   Defaults Upon Senior Securities . . . . . . . . . . . . . . . 12

     Item 4.   Submission of Matters to a Vote of Security Holders . . . . . 12

     Item 5.   Other Information . . . . . . . . . . . . . . . . . . . . . . 13

     Item 6.   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . 13


                                     2

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS
                                       SYS
                            CONDENSED BALANCE SHEETS

                                                       9/30/97        6/30/97
                                                    -------------    ---------
                                                     (UNAUDITED)
ASSETS
-------------------------------------------
Current assets:
     Cash                                            $   18,000      $  194,000
     Contract receivables, net                        1,317,000       1,043,000
     Other current assets                               266,000         215,000
                                                     ----------      ----------
          Total current assets                       $1,601,000      $1,452,000
Equipment, furniture and fixtures,
     at cost, less accumulated
     depreciation and amortization                      151,000         148,000
Other assets                                             15,000          15,000
                                                     ----------      ----------
                                                     $1,767,000      $1,615,000
                                                     ----------      ----------
                                                     ----------      ----------
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current liabilities:
     Note payable to bank                            $  297,000      $        0
     Accounts payable                                   293,000         462,000
     Accrued payroll and related taxes                  174,000         238,000
     Other accrued liabilities                           56,000          65,000
     Current portion of other long-term debt            101,000         113,000
     Income taxes payable                                 2,000               0
                                                     ----------      ----------
          Total current liabilities                  $  923,000      $  878,000
Other long-term debt                                    112,000         125,000
Stockholders' equity:
     Preferred stock                                     55,000          55,000
     Series B Preference Stock                           76,000          78,000
     Common stock                                       446,000         443,000
     Retained earnings                                  155,000          36,000
                                                     ----------      ----------
          Total stockholders' equity                 $  732,000      $  612,000
                                                     ----------      ----------
                                                     $1,767,000      $1,615,000
                                                     ----------      ----------
                                                     ----------      ----------



                                     3

<PAGE>

                                       SYS
                        CONDENSED STATEMENT OF OPERATIONS
                                   (Unaudited)

                                                       THREE MONTHS ENDED
                                                          SEPTEMBER 30
                                                  -----------------------------
                                                      1997             1996
                                                  -------------    ------------

Contract revenues                                   $2,034,000      $1,556,000
                                                    ----------      ----------
Costs and expenses:
     Contract costs                                 $1,723,000      $1,290,000
     General and administrative                        184,000         181,000
                                                    ----------      ----------
                                                    $1,907,000      $1,471,000
                                                    ----------      ----------
Income from operations                              $  127,000      $   85,000
Other expenses:
     Interest                                            8,000           9,000
                                                    ----------      ----------
                                                    $    8,000      $    9,000
                                                    ----------      ----------
Income before income taxes                          $  119,000      $   76,000
Provision for income taxes                                   0               0
                                                    ----------      ----------
Net income                                          $  119,000      $   76,000
Dividends on preferred shares                                0               0
                                                    ----------      ----------
Net income applicable to
     common and common equivalent shares            $  119,000      $   76,000
Retained earnings at beginning of period                36,000        (187,000)
                                                    ----------      ----------
Retained earnings at end of period                  $  155,000      $ (111,000)
                                                    ----------      ----------
                                                    ----------      ----------
 
Earning per common and
     common equivalent shares                       $     0.04      $     0.03
                                                    ----------      ----------
                                                    ----------      ----------
Weighted average number of common and
     common equivalent shares                        3,253,651       2,827,186
                                                    ----------      ----------
                                                    ----------      ----------


                                     4

<PAGE>

                                       SYS
                        CONDENSED STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED
                                                                SEPTEMBER 30
                                                          ------------------------
                                                              1997         1996
                                                           ----------    ---------
<S>                                                        <C>            <C>
Operating activities:
Net income                                                 $   119,000    $   76,000
Adjustments to reconcile net income to net cash
   provided by (used for) operating activities:
      Depreciation and amortization                             13,000        11,000
      Provision for doubtful accounts                                0             0
      Changes in operating assets and liabilities:
         Contract receivables                                 (274,000)     (177,000)
         Other current assets and other assets                 (51,000)      (14,000)
         Accounts payable                                     (167,000)       75,000
         Accrued payroll and related taxes                     (64,000)      (73,000)
         Other accrued liabilities                              (9,000)      (24,000)
                                                           -----------    ----------
Net cash provided by (used in) operating activities        $  (433,000)   $  (126,000)
Investing activities:
Acquisition of furniture and equipment                     $   (16,000)   $    (9,000)
(Increase) decrease of other assets                                  0              0
                                                           -----------    ----------
Net cash provided by (used in) investing activities        $   (16,000)   $    (9,000)
                                                           -----------    ----------
Financing activities:
   Proceeds from note payable to bank                      $ 2,048,000    $ 1,435,000
   Payments on note payable to bank                         (1,747,000)    (1,365,000)
   Other notes payable                                         (18,000)       104,000
   Payments of capital lease obligations                       (10,000)        (9,000)
   Payments of preferred stock dividends                             0              0
   Proceeds from issuance of common shares                           0              0
                                                           -----------    ----------
Net cash provided by (used in) financing activities        $   273,000    $   165,000
                                                           -----------    ----------
Increase (decrease) in cash                                $  (176,000)   $    30,000
Cash at beginning of period                                    194,000         25,000
                                                           -----------    ----------
Cash at end of period                                      $    18,000    $    55,000
                                                           -----------    ----------
                                                           -----------    ----------
</TABLE>

                                     5

<PAGE>

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


(1)       In the opinion of the Registrant, the unaudited financial 
information in this report reflects all adjustments, consisting only of 
normal recurring accruals, which are considered necessary to a fair 
presentation of the results of the periods shown.  Certain information and 
footnote disclosures normally included in financial statements prepared in 
accordance with generally accepted accounting principles have been condensed 
or omitted pursuant to SEC regulations.  It is suggested that these financial 
statements be read in conjunction with the audited financial statements 
included in the Registrant's Report on Form 10-KSB for the fiscal year ended 
June 30, 1997.

(2)       Income per common share is computed by dividing the net income 
applicable to common stock for the year by the weighted average number of 
common shares outstanding as adjusted for the dilutive effects of the assumed 
conversion of the 4% preferred stock (a common stock equivalent) and the 
exercise of stock options.  The effects of the assumed conversion of the 9% 
preference stock were either anti-dilutive or immaterial.

(3)       The results of operations for the quarter ended September 30, 1997, 
are not necessarily indicative of the results to be expected for the full 
year.

ITEM 1A.  FACTORS WHICH MAY AFFECT FUTURE RESULTS

     Information contained in this Form 10-QSB should be studied carefully by 
any potential investor while considering the following risk factors to the 
Company.

     1.   LACK OF BUSINESS DIVERSIFICATION  Essentially all the Company's 
business at the present time is with the U.S. Navy.  Even though the level of 
business with its customers is growing and the Company has negotiated 
multiple-year contracts, there is no certainty that budget changes in 
Congress or the Defense Department will not seriously affect the Company.

     2.   DEPENDENCE ON KEY PERSONNEL  The Company has a few key management, 
project and technical personnel that are intimately involved in their 
functions and have day to day relationships with critical customers.  The 
Company is not able to afford extra standby staff. As a result, at its 
current size, it would be affected in an uncertain way if any of these 
personnel are lost to the company.

     3.   COMPETITION  The Company has many competitors who vie for the same 
customers as SYS.  They are competent, experienced and continuously working 
to take work projects away from the Company.

     4.   PRIOR OPERATING HISTORY AND LACK OF TIMELY SEC FILINGS  The Company 
is current on its SEC filings and has been throughout the two years covered 
by this 10-QSB.

     5.   LIMITED ASSETS OF THE COMPANY  The Company has very limited assets 
upon which to rely on for adjusting to business variations and for growing 
new businesses.  While the Company is 

                                     6

<PAGE>

likely to look for new funding to assist in the acquisition of other 
profitable businesses, it is uncertain whether such funds will be available.

     6.   LIMITED MARKET FOR COMMON STOCK.  The Company's stock is traded  
(OTC) on the Electronic Bulletin Board.  Trading for the stock is sporadic 
and at present there is a limited market for the Company's Common Stock.  
There can be no assurance that a market will in fact develop.  Even if a 
market does develop, it may not be sustained.

     7.   POSSIBLE RULE 144 STOCK SALES.  A total of 2,191,104 shares of the 
Company's outstanding Common Stock are "restricted securities" and may be 
sold only in compliance with Rule 144 adopted under the Securities Act of 
1933 or other applicable exemptions from registration.  Rule 144 provides 
that a person holding restricted securities for a period of one year may 
thereafter sell in brokerage transactions, an amount not exceeding in any 
three month period the greater of either (i) 1% of the Company's outstanding 
Common Stock, or (ii) the average weekly trading volume during a period of 
four calendar weeks immediately preceding any sale.  Persons who are not 
affiliated with the Company and who have held their restricted securities for 
at least two years are not subject to the volume limitation.  Possible or 
actual sales of the Company's Common Stock by present shareholders under Rule 
144 may have a depressive effect on the price of the Company's Common Stock 
in any market which may develop.  

     8.   RISKS OF LOW PRICED STOCKS.  Trading in the Company's stock is 
limited.  Consequently, a shareholder may find it more difficult to dispose 
of, or to obtain, accurate quotations as to the price of, the Company's 
securities. In the absence of a security being quoted on NASDAQ, trading in 
the Common Stock is covered by Rule 3a51-1 promulgated under the Securities 
Exchange Act of 1934 for non-NASDAQ and non-exchange listed securities.

     Under such rules, broker/dealers who recommend such securities to 
persons other than established customers and accredited investors (generally 
institutions with assets in excess of $5,000,000 or individuals with net 
worth in excess of $1,000,000 or an annual income exceeding $200,000 or 
$300,000 jointly with their spouse) must make a special written suitability 
determination for the purchaser and receive the purchaser's written agreement 
to a transaction prior to sale.  Securities are also exempt from this rule if 
the market price is at least $5.00 per share, or for warrants, if the 
warrants have an exercise price of at least $5.00 per share.  The Securities 
Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure 
related to the market for penny stocks and for trades in any penny stock 
defined as a penny stock.

     The Commission has recently adopted regulations under such Act which 
define a penny stock to be any NASDAQ or non-NASDAQ equity security that has 
a market price or exercise price of less than $5.00 per share and allow for 
the enforcement against violators of the proposed rules.

     In addition, unless exempt, the rules require the delivery, prior to any 
transaction involving a penny stock, of a disclosure schedule prepared by the 
Commission explaining important concepts involving a penny stock market, the 
nature of such market, terms used in such market, the broker/dealer's duties 
to the customer, a toll-free telephone number for inquiries about the 
broker/dealer's disciplinary history, and the customer's rights and remedies 
in case of fraud or abuse in the sale.

     Disclosure also must be made about commissions payable to both the
broker/dealer and the registered representative, current quotations for the
securities and, if the broker/dealer is the sole market maker, the broker/dealer
must disclose this fact and its control over the market.


                                     7

<PAGE>

     Monthly statements must be sent disclosing recent price information for 
the penny stock held in the account and information on the limited market in 
penny stocks.  While many NASDAQ stocks are covered by the proposed 
definition of penny stock, transactions in NASDAQ stock are exempt from all 
but the sole market-maker provision for (i) issuers $2,000,000 in tangible 
assets ($5,000,000 if the issuer has not been in continuous operation for 
three years), (ii) transactions in which the customer is an institutional 
accredited investor and (iii) transactions that are not recommended by the 
broker/dealer.  In addition, transactions in a NASDAQ security directly with 
the NASDAQ market maker for such securities, are subject only to the sole 
market-maker disclosure, and the disclosure with regard to commissions to be 
paid to the broker/dealer and the registered representatives.

     Finally, all NASDAQ securities are exempt if NASDAQ raised its 
requirements for continued listing so that any issuer with less than 
$2,000,000 in net tangible assets or stockholder's equity would be subject to 
delisting.  These criteria are more stringent than the proposed increase in 
NASDAQ'S maintenance requirements.  the company's securities are subject to 
the above rules on penny stocks and the market liquidity for the Company's 
securities could be severely affected by limiting the ability of 
broker/dealers to sell the Company's securities.


                                    8

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

DESCRIPTION OF BUSINESS

          The Company provides management and technical services in systems 
planning, management and analysis, systems engineering, naval architecture, 
marine engineering, ordnance engineering, logistics analysis and engineering, 
operations analysis, design development, reliability engineering and 
analysis, hazardous materials reduction studies, computer systems analysis, 
office automation, information management systems and related support 
services.  The Company also provides hardware integration and fabrication.

          The Company currently has three principle contracts with the U. S. 
Navy.  These prime contracts are the Underway Replenishment (UNREP); 
Management, Planning and Analysis (MPA); and Naval Architecture and Marine 
Engineering (NAME).

          The Underway Replenishment (UNREP) Program was extended into its 
final of three option years on September 1, 1996.  On July 25, 1997, the 
contract was extended an additional six months which runs through February 
28, 1998.  The proposal for the follow on contract was submitted on September 
11, 1997.  UNREP provides in-service engineering support to the U.S. Navy 
fleet. The Company is continuing its support for the research and development 
project to design and build a full size ship mock-up of a missile rearming 
system.  An AEGIS Cruiser Vertical Launch Test System was fitted with a full 
scale mock-up capable of demonstrating the rearming and strikedown system 
feasibility for replenishing the Navy Standard Missile and the shipboard 
Tomahawk missile system while underway at sea.  This project will now 
continue to refine the detail design. Shipboard technical assistance 
continues to expand and provides the basis for continued business confidence 
in the coming year.

          The Management, Planning and Analysis (MPA) Program had its second 
of four option years exercised on February 1, 1997.  This Program supports 
the U.S. Navy's Port Hueneme Division, Naval Surface Warfare Center.  The 
Statement of Work provides a broad and flexible scope of work which allows a 
wide range of tasking.  SYS has developed work competencies in such areas as 
Management Consulting, Information Services, Human Resource Services, Combat 
Systems Engineering and Facilities Engineering.  The MPA Program has received 
customer recognition for its high standards of excellence and 
professionalism.  Continued growth of this Program area is anticipated.

          The Naval Architecture and Marine Engineering (NAME) Program had 
its first of four option years exercised on November 25, 1996.  This cost 
plus fixed fee contract was issued by the U.S. Navy's Port Hueneme Division, 
Naval Surface Warfare Center (PHD NSWC).  The Company's largest customer on 
this contract is the Ship Self Defense Department of PHD NSWC.  Along with 
our Associate Subcontractor, John J. McMullen Associates, Inc. (JJMA), we 
provide extensive support for Ship Self Defense Systems in the areas of 
weapon systems installation design, planning and coordination.  The outlook 
for this contract next year is good, but challenging.  We are attempting to 
expand our customer base in an environment of decreasing customer budgets.


                                    9

<PAGE>

          The Company was awarded a two year subcontract from Systems 
Application and Technologies to continue its support to the Naval Air Systems 
Command.  This support provides environmental engineering and technical 
services focusing on the identification and reduction of hazardous material 
when providing maintenance to weapons and associated handling and shipping 
equipment. Hazardous material reduction support is being expanded to include 
support for Foreign Military Sales.

          Washington Operations successfully recompeted for another five year 
subcontract with their prime contractor, Tracor, to continue program 
management support to the Program Executive Office, Surface Combatants/AEGIS 
Program (PEO,SC/AP), PMS400.  The Company provides contract and other 
financial reconciliation and closure support for the Japanese AEGIS Foreign 
Military Sales cases.  The Company also provides other financial management 
support including case closure processing support to PMS400.

          On September 5, 1997, the Company began to provide UNREP-type 
services to the Republic of Korea Navy through a subcontract with Lake Shore, 
Inc.  This program will run through most of this fiscal year.

          The Company's sales of Sun computers and equipment continued at a 
reduced level.  The Company is also attempting to apply the skills acquired 
in the Defense arena into the commercial sector.  The Company recently 
received notification from the State of California that it has been approved 
as a supplier of services to the State.
          
RESULTS OF OPERATIONS

          The Company revenues for the first quarter of FY 1998 are 
approximately 31% higher than those in the same quarter in FY 1997. The 
revenue increase is primarily due to a 9% increase in work on the MPA 
contract, a 6% increase in work on the UNREP contract and a 410% increase in 
work on the NAME contract.  The profit for the quarter is $119,000 as 
compared to $76,000 for this quarter in the prior year.  The negotiated 
contract backlog was approximately $4,583,000 at the end of the quarter.

          The Company's line of credit with Scripps Bank increased to 
$297,000 at the end of the first quarter of FY 1998.  At the end of the same 
period in FY 1997, the line of credit balance was $169,000.  The reason for 
the increased usage at September 30, 1997 is a timing difference.  Billed 
contract receivables had not been paid by the end of the quarter, but 
payments were received shortly thereafter, which reduced the line of credit 
balance to zero.

LIQUIDITY AND CAPITAL RESOURCES

          The Company had contract receivables (net) of $1,317,000 at the end 
of the first quarter of FY 1998.  For the same quarter in FY 1997, the 
contract receivables (net) were $1,164,000.  This is a direct result of the 
increase in revenue.

          The Company had accounts payable of $293,000 at the end of the 
first quarter of FY 1998.  For the same quarter in FY 1997, the accounts 
payable were $377,000.


                                    10

<PAGE>

          The Company maintains a $500,000 revolving credit facility with 
Scripps Bank which matured on August 30, 1997.  The Bank extended the loan to 
October 15, 1997, at which time it was renewed for a year.  The loan is 
secured by all the Company's assets including contract receivables.  Scripps 
advances funds requested by the Company of up to 75% of the Company's billed 
contract receivables which are less than 90 days old.  Scripps charges an 
interest rate of 1.5% over prime.

          Management believes that the Company will have sufficient cash flow 
from operations and funds available under the revolving credit agreement with 
Scripps Bank to finance its operating and capital requirements through at 
least the current fiscal year.

     Several key factors indicating the Company's financial condition include:

                                SEPTEMBER 30, 1997     JUNE 30, 1997
                                -----------------      -------------
 
 Current ratio                       1.73                 1.65
 Maximum debt to net worth           1.41                 1.64
 Net worth                         $732,000             $612,000
 Net working capital               $678,000             $574,000
 Debt to total assets                 59%                  62%
 Book value per common share        $0.23                $0.20
 

          The current ratio is derived by dividing total current assets by total
current liabilities.  Maximum debt to net worth is calculated by dividing total
liabilities (total current liabilities plus other liabilities) by net worth. 
Net worth is total stockholders' equity.  Net working capital is total current
assets less total current liabilities.  Debt to total assets is total
liabilities divided by total assets.  Book value per common share is total
stockholders' equity divided by the weighted average number of common and common
equivalent shares.


                                     11

<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

          On June 14, 1996, the Company filed a Notice of Appeal from the 
Judgement and Order on the Jury Verdict of April 3, 1996 regarding the 
outcome of the Gray, Cary, Ames & Frye (GCAF) lawsuit.  To obviate the 
necessity for bonding the appeal to preclude collection efforts during the 
appeal, the Company paid the Judgement on May 9, 1997, reserving its rights 
to continue the appeal.

          In November 1995, a creditor of Systems Exploration, Inc. (SEI) 
filed a breach of contract action against the Company in California Superior 
Court. The Company maintains it has no liability to this plaintiff with 
respect to this matter and has vigorously defended this action.  On September 
17, 1997, the Company submitted a settlement offer on this matter in an 
effort to bring it to closure.

ITEM 2.   CHANGES IN SECURITIES        

          On July 1, 1997, the Company granted the conversion of 2,684 shares 
of Series B 9% Cumulative Convertible Callable Non-Voting Preference Stock 
into 5,368 shares of Common Stock. 

          During the year ended June 30, 1997, the Board of Directors 
authorized non-qualified stock purchase options of 25,000 Common shares each 
to outside directors Paul I. Anderson, Charles H. Werner and Robert D. Mowry, 
which may be exercised at $0.31, $0.09 and $0.47 per share, respectively.  
Exercise of the Mowry and Werner options is subject to the approval of the 
Shareholders to increase the number of shares allocated under the 1997 SYS 
Incentive Stock Option and Restricted Stock Plan for non-employee directors 
and consultants by 250,000 Common shares.  There were originally 100,000 
Common shares available to non-employee directors and consultants through the 
Plan, 75,000 of those shares were previously issued.  The remaining 25,000 
shares currently issuable were allocated to Mr. Anderson under a 
Non-Qualified Stock Option Agreement dated July 31, 1997.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES          None

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

          Subsequent to the end of this reporting period, on October 28, 
1997, an Action of the Holders of a Majority of the Shares Outstanding by 
Written Consent in Lieu of a Meeting of SYS approved an amendment of Section 
(a), Fourth Article, of the Articles of Incorporation.  This amendment stated 
"The number of directors of this corporation shall not be less than five, nor 
more than nine, the exact number of which shall be fixed by a bylaw duly 
adopted by the shareholders or by the corporation's board of directors."  A 
Certificate of Amendment of Articles of Incorporation of SYS was approved by 
the Board of Directors and by the required vote of 


                                     12

<PAGE>

Shareholders and is pending filing with the Secretary of State of California.

ITEM 5.   OTHER INFORMATION

          Effective August 1, 1997, Mr Robert D. Mowry was elected as 
Chairman of the Board and Chief Executive Officer of the Company.

          At the Board of Directors meeting on August 20, 1997, Mr. L. 
Randolph Knapp was elected to fill the vacant seat on the Board effective as 
of September 16, 1997.

          At the Board of Directors meeting on September 16, 1997, Mr. 
Richard W. Wood was elected as a director of the Company effective on the 
date the Company's Articles of Incorporation provide for nine (9) directors.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          Form 8-K was filed on August 1, 1997, reporting that Mr. Robert D. 
Mowry had been elected as Chairman of the Board and Chief Executive Officer 
of the Company.


                                     13

<PAGE>

                                  SIGNATURES

          In accordance with the requirements Exchange Act, the registrant 
caused this report to be signed on its behalf by the undersigned, thereunto 
duly authorized.

                                                     SYS
                                         -----------------------------
                                                 (Registrant)



Date: November 10, 1997                  /s/ ROBERT D. MOWRY
      -----------------                  ------------------------------
                                         Robert D. Mowry
                                         Chairman and
                                         Chief Executive Officer


                                    14